This year it’s not just the PlayStation 5 and Lego Star Wars sets. Gift cards are one of the coolest holiday gifts.
Shoppers are worried about visiting stores because Covid-19 cases are on the rise and they don’t want to risk gifts that arrive late due to delivery delays, pick up prepaid debit cards, according to companies that measure gift card sales.
Gift card purchases in the first week of December were twice as high as in the same period last year, according to InMarket, a data analytics company. Gift card sales rose 48% at the end of last week compared to the beginning of the week as deadlines for free delivery with guaranteed Christmas delivery have expired, according to Rise.ai, which manages electronic gift card programs for more than 5,000 brands, including Allbirds and Milk Bar.
Tim Maynard has already spent nearly $ 300 on gift cards this year at Amazon.com retailers Inc.
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to aim Body.
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at Home Depot Inc.
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In recent years, the 32-year-old financial analyst said he avoided saying the books because they felt impersonal.
“It was kind of the last resort this year,” said St. Louis resident. Clair, Mo. “Without the ability to go into stores and see things, it’s hard to buy presents.”
The gift card boom may not help with holiday sales. Retailers cannot record revenue until the cards are redeemed, according to Nathan Ehrlich, president of the Retail Gift Card Association.
Cards could boost sales next year as shoppers return to stores or buy them back online. “We believe that an increase in gift cards will lead to a change in spending in the first quarter of next year and beyond,” said Todd Dipaola, CEO of InMarket.
There are two types of gift cards. So-called closed-loop cards are issued by banks and branded merchants, including Macy’s or Amazon. They usually have no commissions and do not expire, but can only be used at the card-branded retailer, according to David Nelyubin, a senior research analyst at Mercator Advisory Group Inc., a payment consulting firm.
Open-loop cards operate on card networks, such as those managed by Mastercard Inc.
and Visa Inc.
These cards can be used wherever these brands are accepted, but usually charge fees to recipients. “If you don’t use the money, the taxes will lose their balance,” Mr Nelyubin said.
How will the pandemic affect American retailers? As states across the country struggle to return to business, the WSJ is investigating the evolution of the retail landscape and how consumers could shop in a post-pandemic world.
The best-selling gift cards this year are Visa, Amazon, Microsoft Body
Xbox, Kohl’s Body.
and Lowe’s Cos., according to InMarket.
The average buyer spends 17.6% more on gift cards in 2020 compared to 2019, while the average number of gift card transactions per buyer increases by 12.3% compared to last year, InMarket said.
A considerable part of gift cards remain unused, allowing merchants and card issuers to subsequently reserve some of these funds as revenue in accordance with accounting rules. Mercator estimates that traders keep $ 3.5 billion in unpaid balances annually.
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Some of the unused balances go back to the states. Some states take responsibility for returning funds to consumers. In cases where consumers cannot be located, the money goes to the state where the issuing company is domiciled, according to Mr Ehrlich of the gift card association.
Worried about the increase in Covid-19 cases, Debika Sihi has stopped going to the shops and instead buys e-cards for friends and family from local stores this year.
“With UPS and FedEx under so much pressure, I’m afraid that if I send a gift in the mail, it might not arrive before Christmas,” said the 38-year-old resident of Austin, Texas.
Write to Suzanne Kapner to [email protected]
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